NEW DELHI: Kerala Finance Minister K N Balagopal, who has often been vocal about fighting for the state’s fiscal rights, took a more measured tone on Friday as he sought a special package of Rs24,000 crore to address the state’s liquidity crunch.
Speaking at a pre-Budget meeting chaired by Union Finance Minister Nirmala Sitharaman, Balagopal also highlighted broader national economic challenges, including elevated inflation, slow credit and deposit growth, tightening liquidity conditions, and a depreciating rupee.
The minister, while reiterating Kerala’s demand for a package to be disbursed over two years starting from 2025-26, also called for an additional Rs2,000 crore to aid relief efforts in Wayanad, which was devastated by landslides earlier this year.
Balagopal’s plea comes against the backdrop of the state grappling with mounting fiscal pressures.
“The immature implementation of GST, cessation of GST compensation, and newer restrictions on borrowing have eroded the fiscal powers of states like Kerala,” he said, emphasising that fiscal consolidation targets should not come at the expense of sustainable growth.
Wayanad catastrophe
The July 30 landslides in Wayanad left 254 people dead, injured over 400, and displaced hundreds. Yet, Balagopal’s address marked a noticeable shift in focus, dedicating more attention to the country’s macroeconomic challenges than solely Kerala’s woes.
He urged the central government to extend the GST compensation scheme until systemic issues are resolved and GST revenues align with the original promises made to states.
In addition to the liquidity package and Wayanad relief, Balagopal sought Rs5,000 crore for the Vizhinjam International Sea Port project, asserting that substantial investments in critical infrastructure are essential for long-term growth.
“The macroeconomic situation needs urgent attention,” Balagopal said, underlining that inflation continues to be a significant barrier to growth, while slow credit and deposit growth, coupled with tighter liquidity, are constraining the economy.
The finance minister’s address stands out for its attempt to position Kerala’s struggles within the broader economic narrative, signaling a shift from demanding rights to appealing for support amid shared national challenges.
